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SYNERGEN IL-1ra WORK ON ADDITIONAL INDICATIONS BOOSTS STOCK IN MAY

Executive Summary

Synergen, buoyed by the announcement of the start of new clinical trials for its interleukin-1 receptor antagonist Antril in a third indication, led the "F-D-C" May index of O-T-C stocks, rising 7-5/8 to 33-3/4. Company President and CEO John Saxe told the Alex. Brown annual healthcare conference on May 9 that IL-1ra would soon begin clinicals for acute and chronic myelogenous leukemias. Synergen announced June 6 that the studies have started at M.D. Anderson Cancer Center in Houston. Antril is already in Phase II trials for rheumatoid arthritis and sepsis and septic shock. In addition, Saxe predicted possible IND filings later this year for inflammatory bowel disease and asthma. Adding to the good news for Synergen in May was the designation by FDA of the company's natural elastase inhibitor as an orphan drug for cystic fibrosis and genetic emphysema. Synergen expects to initiate Phase II trials of SLPI this year. The 29.2% rise in Synergen's stock price provided a nearly complete rebound from a 9-3/8 slide in late April as the stock joined a broad biotech retreat. At the end of March, Synergen was trading at 35-1/2. With the May turnaround, Synergen stock nearly has doubled in value from its 1990 close at 17-1/4. Despite the strong performance year-to-date, Synergen's current market cap remains fairly low at $ 361.5 mil. Alex. Brown analyst David Webber, in an April 26 review of the company, estimated that Synergen was worth closer to $ 50 a share. Synergen would appear to merit a higher valuation based on a number of factors including: The company's diversified pipeline: Synergen's lead product Trofak (basic fibroblast growth factor) is in Phase III trials for wound healing and was the first bFGF to enter clinicals. Synergen also holds the only issued U.S. patent on bFGF. The company is also in early stage development of neurotrophic factors under a February 1990 $ 15 mil. joint venture with Syntex. The company's ciliary neurotrophic factor (CNTF) is showing promise as lead compound in that CNS effort. A strong financial footing: In addition to the $ 15 mil. from the Syntex joint venture, Synergen raised $ 52.5 mil. through a private placement in February in a limited partnership for Antril R&D and followed that with a $ 95 mil. stock offering of 2.25 mil. shares. Although May lacked the drama of the April boom in healthcare stocks, the steady rebound from the fall-off in the last week of April helped the "F-D-C" Index to outperform the broader market indices. The pharmaceutical composite on the Index rose 4.8% and the overall Index by 5.9%. By comparison, the DJIA, which topped the historic 3,000 mark and closed May 31 at 3,000.45, was up 3.9% while the S&P 500 rose 3.1%. Chart omitted.
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